Prime downtown Austin hospital site poised for redevelopment

It will be up to developers to shape the future of the six blocks where University Medical Center Brackenridge sits into what could become one of downtown Austin’s largest mixed-use projects.

The 14.3-acre site at 15th and Red River streets is owned by the board of Central Health, the Travis County entity charged with providing health care to low-income and uninsured residents. Central Health is expected to approve a master development plan Wednesday night created by Gensler, an architectural and design firm.

“The Central Health site is the largest (nonstate-owned) site for redevelopment left in downtown,” said Charles Heimsath, a local real estate consultant. “Given the extraordinary strength of the downtown market, it should attract numerous offers from nationally known mixed-use developers.”

David Armbrust, an Austin real estate lawyer, said the site is “one of the last — if not the last — large tracts of contiguous land poised for redevelopment in the central business district. We may need to wait another generation or two to see something similar.”

The ­development could have as much as 3.7 million square feet of space, and buildings as tall as 35 to 40 stories. Proposed uses include a hotel, housing, restaurants, shops and a medical office building.

“It certainly has the potential of being the largest mixed-use project ever, in terms of both size and value, in downtown Austin,” said Perry Lorenz, a downtown landowner and developer.

Todd Runkle, principal and managing director of Gensler’s Austin office, said the development “will truly be a transformational project.”

“Central Health has received a tremendous amount of interest from the local and national real estate and financial investment community,” Runkle said.

The potential uses outlined in Gensler’s plan aren’t surprising based on discussions last year about redeveloping the site.

Central Health says the suggestions in the plan are flexible and fluid “to take advantage of unforeseen opportunities” and “address unforeseen challenges.” The plan will take shape over the next 15 to 20 years just south of a new medical school, research building and teaching hospital that will replace the publicly owned UMC Brackenridge. The new hospital is to open in 2017 and will be owned by the Seton Healthcare Family, which operates UMC Brackenridge for Central Health on a long-term lease.

That lease brings in about $32 million a year, which goes to Central Health. A key reason for redeveloping the Brackenridge campus is to bring in revenue to offset that loss. The plan, as proposed, should accomplish that, said Sarah Malm, senior director of strategy and business development at Central Health.

Another goal is to incorporate feedback from the community, obtained from a series of forums, Malm said. Ideas for the site included offering behavioral health services, building low-income housing, delivering social services to homeless people and providing job training for poor residents. Differences emerged between those who want the project to focus on services and those who favor businesses that would return revenue.

Central Health officials said the proposal includes both, though the plan’s focus is weighted heavily to revenue-producing ideas. Specific services and businesses won’t be determined until Central Health asks developers to respond to a request for proposals, which will go out in the next six months, Malm said.

Malm said the master plan is “about laying the framework for the potential redevelopment process.”

The plan proposes razing buildings on the property in phases. The last to go would be the hospital parking garage, which would serve new medical facilities across the street and is expected to continue providing about $9 million a year in revenue to Central Health. The final build-out of the site is expected between 2030 and 2035, Malm said.

“This is a milestone in a really long process,” Malm said. “This is not the end.”

The plan calls for setting aside one block for a medical office building. But health concerns are contemplated elsewhere in the plan.

Central Health would retain ownership of the land and lease space to businesses and others. Property tax revenue would come from such ventures as a hotel, should one end up on the site, Malm said. Central Health would put the revenues it receives back into its programs and health care services, she said.

To date, Central Health has spent almost all of the $1.5 million the board allocated on developing a master plan, Malm said.

The Travis Central Appraisal District values the land alone at $42.8 million, not counting the buildings, which include two parking garages, a medical office building and education center.

Central Health’s upcoming request for proposals will provide a rare opportunity for developers, real estate experts say.

Downtown has seen a surge of new development since 2000. One of the largest redevelopment projects to date is taking place in the Seaholm district on downtown’s southwestern side, where former industrial sites are being transformed into housing, shops, offices, restaurants, a hotel and a new central library.

The Seaholm projects attracted interest from both local and national developers.

With the Brackenridge site, “its proximity to the University of Texas, the Waller Creek corridor, I-35, the central business district, the new medical school, and on and on, will make it very interesting to large, well-funded developers,” Lorenz said. “Its ultimate value will depend on zoning, height restrictions and entitlements, all of which boils down to allowable density.”

Dewitt Peart, president and CEO of the Downtown Austin Alliance, said the site’s location, which isn’t in a height-restricted Capitol view corridor, gives it “a significant competitive advantage.”

Reader Comments ...

Next Up in Business

Up the Ladder

Credit unions Greater Texas Credit Union has named Lisa Bateman vice president-consumer lending. Consulting Potomac Strategy Group has named Jamie Bennett vice president. E-Commerce Twyla has named Thomas Galbraith chief executive officer. Health care HNI Healthcare has named Michael Saunders president. Law firms Weisbart Springer Hayes has named Mia...
Top Local Business Stories of the Week
Top Local Business Stories of the Week

TEXAS ECONOMY With tax overhaul as ‘tailwind,’ regional economy surged, Dallas Fed says: Economic activity in Texas and parts of two neighboring states surged over the past six weeks, as the federal tax overhaul boosted confidence across a wide range of businesses in the region, according to a report last week from the Federal Reserve Bank...
Despite tight labor market, Austin job growth maintains momentum
Despite tight labor market, Austin job growth maintains momentum

Back around the middle of last year, workforce experts looked at the easing rate of Austin-area job growth and figured the inevitable had finally arrived: The region’s tight labor market was bringing expansion back to more reasonable levels. In true Austin fashion, though, local hiring re-accelerated in the months since. And after modest job...
Amazon raises monthly Prime membership rate
Amazon raises monthly Prime membership rate

The monthly membership fee for Amazon Prime rose Friday from $10.99 to $12.99. Company officials said the annual membership will remain at $99 dollars. Monthly customers do not get access to Amazon Video, which costs $8.99 a month. The last Prime subscription hike came in 2014, when Amazon increased its yearly membership from $79 to $99. The e-commerce...
Top tips for selling your old stuff on eBay (and actually making cash)
Top tips for selling your old stuff on eBay (and actually making cash)

Too much clutter, too little money, too many gifts you didn't like... an eBay auction is one of the simplest solutions to all three issues. If your trash might be someone else's treasure, an eBay business is simple to start and accessible to just about anyone. "It has low start-up costs and it can be started out of your home," noted the ...
More Stories